ECONOMIC PROBLEM: POVERTY IN INDIAN ECONOMY

RAJAT CHHIKARA BBA (TTM) 054

Definitions of poverty
United Nations: Fundamentally, poverty is the inability of getting choices and opportunities, a violation of human dignity. It means lack of basic capacity to participate effectively in society. It means not having enough to feed and clothe a family, not having a school or clinic to go to, not having the land on which to grow ones food or a job to earn ones living, not having access to credit. It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, and it often implies living in marginal or fragile environments, without access to clean water or sanitation. World Bank: Poverty is pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better ones life. Copenhagen Declaration: Absolute poverty is a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to social services. The term 'absolute poverty' is sometimes synonymously referred to as 'extreme poverty. Poverty is usually measured as either absolute or relative (the latter being actually an index of income inequality). Poverty is the state of one who lacks a certain amount of material possessions or money. Absolute poverty or destitution refers to the deprivation of basic human needs, which commonly includes food, water, sanitation, clothing, shelter, health care and education. Relative poverty is defined contextually as economic inequality in the location or society in which people live.

Poverty in India
Poverty in India is widespread, with the nation estimated to have a third of the world's poor. In 2010, the World Bank reported that 32.7% of the total Indian people falls below the international poverty line of US$ 1.25 per day (PPP) while 68.7% lives on less than US$ 2 per day. According to 2010 data from the United Nations Development Programme, an estimated 29.8% of Indians live below the country's national poverty line. A 2010 report by the Oxford Poverty and Human Development Initiative (OPHI) states that 8 Indian states have more poor people than 26 poorest African nations combined which totals to more than 410 million poor in the poorest African countries. A 2013 UN report stated that a third of the worlds poorest people live in India. According to 2011 poverty Development Goals Report, as many as 320 million people in India and China are expected to come out of extreme poverty in the next four years, while India's poverty rate is projected to drop to 22% in 2015. The report also indicates that in Southern Asia, however, only India, where the poverty rate is projected to fall from 51% in 1990 to about 22% in 2015, is on track to cut poverty by half by the 2015 target date. The latest UNICEF data shows that one in three malnourished children worldwide are found in India, whilst 42% of the nation's children under five years of age are underweight. It also shows that a total of 58% of children under five surveyed were stunted. Rohini Mukherjee, of the Naadi foundation one of the NGOs that published the report stated India is "doing worse than sub-Saharan Africa. The 2011 Global Hunger Index (GHI) Report places India amongst the three countries where the GHI between 1996 and 2011 went up from 22.9 to 23.7, while 78 out of the 81 developing countries studied, including Pakistan, Nepal, Bangladesh, Vietnam, Kenya, Nigeria, Myanmar, Uganda, Zimbabwe and Malawi, succeeded in improving hunger conditions. Since 1991, India has undergone a great deal of liberalisation internally and externally. Many feel that the gains of this liberalisation and globalisation have not accrued to the poor. The absolute number and proportion of people living in poverty in India is staggering.

Causes of poverty in India

One cause is a high population growth rate, although demographers generally agree that this is a symptom rather than cause of poverty. While services and industry have grown at double-digit figures, agriculture growth rate has dropped from 4.8% to 2%. About 60% of the population depends on agriculture whereas the contribution of agriculture to the GDP is about 18%.The surplus of labor in agriculture has caused many people to not have jobs. Farmers are a large vote bank and use their votes to resist reallocation of land for higher-income industrial projects. 1. Rapidly Rising Population: The population during the last 45 years has increased at the rate of 2.2% per annum. On average 17 million people are added every year to its population which raises the demand for consumption goods considerably. 2. Low Productivity in Agriculture: The level of productivity in agriculture is low due to subdivided and fragmented holdings, lack of capital, use of traditional methods of cultivation, illiteracy etc. This is the main cause of poverty in the country. 3. Under Utilized Resources: The existence of under employment and disguised unemployment of human resources and under utilization of resources has resulted in low production in agricultural sector. This brought a down fall in their standard of living. 4. Low Rate of Economic Development: The rate of economic development in India has been below the required level. Therefore, there persists a gap between level of availability and requirements of goods and services. The net result is poverty. 6. Price Rise: The continuous and steep price rise has added to the miseries of poor. It has benefited a few people in the society and the persons in lower income group find it difficult to get their minimum needs. 7. Unemployment: The continuously expanding army of unemployed is another cause of poverty. The job seeker is increasing in number at a higher rate than the expansion in employment opportunities.

8. Shortage of Capital and Able Entrepreneurship: Capital and able entrepreneurship have important role in accelerating the growth. But these are in short supply making it difficult to increase production significantly. 9. Social Factors: The social set up is still backward and is not conducive to faster development. Laws of inheritance, caste system, traditions and customs are putting hindrances in the way of faster development and have aggravate" the problem of poverty. 10. Political Factors: The Britishers started lopsided development in India and reduced Indian economy to a colonial state. They exploited the natural resources to suit their interests and weaken the industrial base of Indian economy. In independent India, the development plans have been guided by political interests. Hence, the planning is a failure to tackle the problems of poverty and unemployment.

Impact of poverty
Since the 1950s, the Indian government and non-governmental organisations have initiated several programmes to alleviate poverty, including subsidising food and other necessities, increased access to loans, improving agricultural techniques and price supports, and promoting education and family planning. These measures have helped eliminate famines, cut absolute poverty levels by more than half, and reduced illiteracy and malnutrition. Presence of a massive parallel economy in the form of black (hidden) money stashed of foreign aid has also contributed to the slow pace of poverty alleviation in India. Although the Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing social groups, economic groups, geographic regions, and rural and urban areas. Between 1999 and 2008, the annualized growth rates for Gujarat, Haryana, or Delhi were much higher than for Bihar, Uttar Pradesh, or Madhya Pradesh. Poverty rates in rural Orissa (43%) and rural Bihar (41%) are among the world's most extreme.

Despite significant economic progress, one quarter of the nation's population earns less than the government-specified poverty threshold of 32 per day (approximately US$ 0.6). According to a 2010 World Bank report, India is on track to meet its poverty reduction goals. However by 2015, an estimated 53 million people will still live in extreme poverty and 23.6% of the population will still live under US$1.25 per day. This number is expected to reduce to 20.3% or 268 million people by 2020. However, at the same time, the effects of the worldwide recession in 2009 have plunged 100 million more Indians into poverty than there were in 2004, increasing the effective poverty rate from 27.5% to 37.2%. As per the 2001 census, 35.5% of Indian households availed of banking services, 35.1% owned a radio or transistor, 31.6% a television, 9.1% a phone, 43.7% a bicycle, 11.7% a scooter, motorcycle or a moped, and 2.5% a car, jeep or van; 34.5% of the households had none of these assets.] According to Department of Telecommunications of India the phone density reached 73.34% by December 2012 and has an annual growth decreased by 4.58%. This tallies with the fact that a family of four with an annual income of 137,000 could afford some of these luxury items.

Reduction in poverty
Despite all the causes, India currently adds 40 million people to its middle class every year. Analysts such as the founder of Forecasting International, Marvin J. Cetron writes that an estimated 300 million Indians now belong to the middle class; one-third of them have emerged from poverty in the last ten years. However, this has to be seen in perspective as the population of India has increased by 370 million from 1991 and 190 million from 2001 so the absolute number of poor has increased. Despite government initiatives, corporate social responsibility (CSR) remains low on the agenda of corporate sector. Only 10% of funding comes from individuals and corporates, and "a large part of CSR initiatives are artfully masqueraded and make it back to the balance sheet." The widening income gap between the rich and the poor over the years has raised fears of a social backlash.

Govt. Policy Regarding Reduction of Poverty

The Govt, of India took certain measures to reduce poverty, inequality of income and wealth in its five year plan periods. Followings are some steps taken by the Govt, from time to time. 1. Integrated Rural Development Programme (IRDP): Integrated Rural Development Programme was initiated in 1976-77 in 20 selected districts and further in 1980 it was started in all blocks of the country. The objective of the programme is to enable the selected families to cross the poverty line through a strategy of productive assets endowment. During the Seventh Five Year Plan period an outlay of Rs. 2.462 crore was provided for the programme and the target was to cover 20 million beneficiaries. 2. National Rural Employment Programme (NREP): National Rural Employment Programme was launched in October 1980. The basic objective of the programme was to generate additional gainful employment in the rural areas to bring about a general improvement in the overall quality of life in rural areas. 3. Rural Landless Employment Guarantee Programme (RLEGP): The RLEGP was launched on 15 August 1983 to generate additional employment in rural areas. The basic objective of the programme was to improve and expand employment opportunities to create productive and durable assets for strengthening rural infrastructure and to improve the overall quality of life in rural areas. 4. Jawahar Rozgar Yojna: Jawahar Rozgar Yojna has been introduced in 1989-90 with a purpose of generating more employment in the country. To create 837 million man days of employment a sum of Rs. 2623 crores has been provided. 5. Training of Rural Youth for Self-Employment:

TRYSEM was launched on August 15, 1979 with the sole aim of generating employment opportunities for the unemployed educated rural youth. The main thrust of this scheme is on equipping rural young in the age group of 1835 years with necessary skills and technology to take up vocations of self employment in the broad fields of agriculture and allied industrial activities. 6. Development of Women and Children. This programme was launched during the Sixth Plan on a pilot basis in 50 districts and was continued in the Seventh Plan. The object of the programme is to improve the lot of rural women through the creation of income generation activities in a district. 7. Drought Prone Area Programme: DPAP was started in 1970-71 in the areas which are chronically affected by the drought. The main object of this programme is to organize permanent works to obviate scarcity relief and to generate adequate employment through labour intensive schemes. 8. Desert Development Programme: DDP was started in 1977 on the recommendations of the National Commission on Agriculture. The main objective of DDP was on controlling further diversification of desert areas and raising the productivity of local inhabitant. 9. Minimum Needs Programme: Keeping in view the basic notion of 'Garibi Hatao' and growth with justice "minimum needs programme" was introduced in Fifth Five Year Plan. The programme aims at 100% employment in the age group of 16-24 by 1990. 10. Employment Exchanges: Government has set up about 890 employ exchanges offering information on the possible vocational avenues. These exchanges not provide employment directly but are of great assistance in directing the job-se to the possible areas of employment.

11. Employment Guarantee Scheme: This Scheme has been launched in states, such as, Maharashtra, West Bengal, Kerala, Rajasthan etc. Under the schemes unemployed persons are given economic assistance. 12. Development of Animal Husbandry and Agriculture: In 1992-93, under Milk Development Plans of Operation Flood about 54 lakh persons were employment. Under agriculture extension training programme, by 1994-9" employ opportunities to 16,000 persons were provided. 13. Employment Assurance Scheme: The Employment Assurance Scheme (was launched in 1994 in 1752 backward blocks in the country. The main objective is to provide 100 days of unskilled manual work to the rural poor who are unemployed. 14. Prime Minister's Rozgar Yojana (PMRY): This Yojana was implementing 1993 to give employment to more than 10 lakh people by setting up seven lakh m enterprises during Eighth Plan in industry, service and business. In 1995-96 it generated employment for 3.75 lakh people. It provided employment to 2.1 lakh proper day in 1999-2000. 15. Prime Minister's Integrated Urban Poverty Eradication Program (PMIUPEP): This programme has been implemented in 1995- 96. This programme at td provides employment to the urban poor. It will cover 50 lakh urban poor living 345 towns. The central government will incur an expenditure of Rs. 800 crores on this programme during a period of Five years. It provided employment to 2.85 lakh 1999-2000. 16. Self-Employment Programmes: Swarnajayanti Gram Swarozgar Yojna (SGSY). Integrated Rural Development Programme (IRDP) and allied programmes as Training of Rural Youth for Self Employment (TRYSEM), Development of Women and Children in Rural Areas (DWCRA) and Million Wells Scheme (MWS) have been restructured into a single

self-employment programme called the Swarnajayanti Gramya Swarozgar Yojana (SGSY) from April 1999. 17. The Swaran Jayanti Rozgar Yojana: This plan began on December 1, 1997 whereas launching of this Yojana, previous programmes meant for providing employment to urban employed like Nehru Rozgar Yojana and Prime Minister Integra- Urban Poverty Eradication Programme were merged into it. It aims at providing self-employment or wage employment to urban unemployed and underemployed persons. It comprises of two plans: (i) Urban Self-Employment Programme-(USEP) and (ii) Ur Wage Employment Programme-(UWEP). Of the total expenditure on the Yojana, percent will be borne by the centre and 25 percent by the state governments. In year 1997-98, a sum of Rs. 125 crore was spent on this yojana. 18. Jawahar Gram Samridhi Yojana: Jawahar Rozgar Yojana has been restructured as Jawahar Gram Samridhi Yojana with effect from April 1999. This Yojana has been formulated to improve the quality of life of the rural poor by providing the additional gainful employment. 19. Other Programmes: Govt, of India launched other employment and poverty alleviation programmes as under: (i) Pradhan Mantri Gramodaya Yojana (PMGY). (ii) Pradhan Mantri Gramodaya Yojana (Gramin Awas). (iii) Pradhan Mantri Gramodaya Yojana-Rural Drinking Water Project. (iv) Pradhan Mantri Gram Sadak Yojana (PMGSY). (v) Autyodya Anna Yojana. (vi) Jai Parkesh Rozgar Guarantee Yojana (JPRGY). (vii) Valmiki Ambedkar Awas Yojana (VAMBAY).